Keywords
Euronext Growth Milan market
Sustainability reporting
Non-financial disclosure
Materiality
Legitimacy theory
How to Cite
Accepted 2025-11-06
Published 2025-12-31
Abstract
Purpose. This research explores how and to what extent Italian listed SMEs disclose sustainability information. As public companies, these SMEs are supposed to be dynamic and competitive, and, according to the legitimacy theory, they should also be incentivised to enhance disclosure transparency across all forms of capital and impact. This paper aims to deepen the understanding of their disclosure practices, an underexplored topic in the SMEs context. Assessing the quantity and quality of non-financial disclosure is crucial for identifying the challenges these firms face in meeting new EU and national regulations, voluntary standards and the increasing expectations of stakeholders.
Methodology. This research focuses on annual reports and supplementary information available on websites to capture multiple aspects of sustainability reporting. It investigates the extent and forms of disclosure, offering a qualitative overview of reporting practices. A content analysis of sustainability information was conducted to evaluate the quality and comprehensiveness of the materiality assessment, considering the steps taken, methods and tools used, and the concept of materiality adopted.
Findings. This study examines the current state of non-financial disclosure among listed SMEs, revealing that they are still far from fully complying with the theory, recent regulations, and standards established by international bodies. In doing so, this research highlights limitations and gaps of current practice regarding both the quantity and quality of sustainability disclosure.
Practical and social implications. From a theoretical perspective, this study enhances understanding of SMEs' willingness to engage in more integrated and transparent disclosure to gain stakeholders’ legitimacy. From a practical standpoint, it highlights the existing gap between theory and practice, clarifying the challenges SMEs face in adapting to an evolving and increasingly demanding regulatory environment.
Originality. This study contributes to the limited literature on sustainability disclosure in SMEs – a timely issue given the growing stakeholder and regulatory attention.
References
Adams, C. A., & Frost, G. R. (2008, December). Integrating sustainability reporting into management practices. In Accounting forum (Vol. 32, No. 4, pp. 288-302). No longer published by Elsevier. https://doi.org/10.1016/j.accfor.2008.05.002
Adams, C. A., & McNicholas, P. (2007). Making a difference: Sustainability reporting, accountability and organisational change. Accounting, auditing & accountability Journal, 20(3), 382-402. https://doi.org/10.1108/09513570710748553
Adams, C., Druckman, P., & Picot, R. (2020). Sustainable development goals disclosure (SDGD) recommendations. Retrieved from: https://www.scaak.org/uploads/files/2020/February/07/Adams_Druckman_Picot_2020_Final_SDGD_Recommendations1581066540.pdf
Adams, C. A., Alhamood, A., He, X., Tian, J., Wang, L., & Wang, Y. (2021). The double-materiality concept: application and issues. Retrieved from: https://durham-repository.worktribe.com/preview/1634374/33139.pdf
Albitar, K., Al-Shaer, H., & Elmarzouky, M. (2021). Do assurance and assurance providers enhance COVID-related disclosures in CSR reports? An examination in the UK context. International Journal of Accounting & Information Management, 29(3), 410-428. https://doi.org/10.1108/IJAIM-01-2021-0020
Aureli, S., Del Baldo, M., & De Villiers, C. (2024). Connecting Environmental, Social and Governance (ESG) aspects with value creation in small and medium-sized enterprises. Piccola Impresa/Small Business, (1). https://doi.org/10.14596/pisb.4558
Beck, A. C., Campbell, D., & Shrives, P. J. (2010). Content analysis in environmental reporting research: Enrichment and rehearsal of the method in a British–German context. The British Accounting Review, 42(3), 207-222. https://doi.org/10.1016/j.bar.2010.05.002
Bernow, S., Godsall, J., Klempner, B., & Merten, C. (2019). More than values: The value-based sustainability reporting that investors want. McKinsey and Company, 7. Retrieved from: https://www.mckinsey.de/~/media/McKinsey/Business%20Functions/Sustainability/Our%20Insights/More%20than%20values%20The%20value%20based%20sustainability%20reporting%20that%20investors%20want/More%20than%20values-VF.pdf
Bikefe, G., Umaru, Z., Araga, S., Faize, M., Ekanem, E., & Daniel, A. (2020). Corporate social responsibility (CSR) by small and medium Enterprise (SMEs). a systematic review. Small Business International Review, 4(1), 16-33. https://doi.org/10.26784/sbir.v4i1.243
Boiral, O. (2013). Sustainability reports as simulacra? A counter-account of A and A+ GRI reports. Accounting, Auditing & Accountability Journal, 26(7), 1036–1071. https://doi.org/10.1108/AAAJ-04-2012-0099
Brammer, S., & Pavelin, S. (2006). Voluntary environmental disclosures by large UK companies. Journal of Business Finance & Accounting, 33(7‐8), 1168-1188. https://doi.org/10.1111/j.1468-5957.2006.00598.x
Brenner, B., & Hartl, B. (2021). The perceived relationship between digitalization and ecological, economic, and social sustainability. Journal of Cleaner Production, 315, https://doi.org/10.1016/j.jclepro.2021.128128
Brusati, L., Fuso, C., & Garlatti, A. (2021). SMEs and: Evidence from Italy. In Development of integrated reporting in the SME sector: Case studies from European countries (pp. 71-102). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-81903-3_4
Bunclark, L., & Barcellos-Paula, L. (2021). Sustainability reporting for sustainable supply chain management in Peru. Sustainable Production and Consumption, 27, 1458-1472. https://doi.org/10.1016/j.spc.2021.03.013
Capriotti, P., & Moreno, Á. (2007). Corporate citizenship and public relations: The importance and interactivity of social responsibility issues on corporate websites. Public relations review, 33(1), 84-91. https://doi.org/10.1016/j.pubrev.2006.11.012
Cho, C. H., Michelon, G., Patten, D. M., & Roberts, R. W. (2015). CSR disclosure: the more things change…?. Accounting, Auditing & Accountability Journal, 28(1), 14-35. https://doi.org/10.1108/AAAJ-12-2013-1549
Cicchini, D., Cotana, M. L., Filocamo, M. R., & Galeotti, R. M. (2024). Sustainability reporting practices in SMEs. A systematic study and future avenues. Piccola Impresa/Small Business, (1). https://doi.org/10.14596/pisb.4022
Comyns, B., Figge, F., Hahn, T., & Barkemeyer, R. (2013, September). Sustainability reporting: The role of “Search”,“Experience” and “Credence” information. Accounting Forum, 37/3, 231-243. No longer published by Elsevier. https://doi.org/10.1016/j.accfor.2013.04.006
CONSOB (2024). Report on non-financial reporting of Italian companies, https://www.consob.it/web/consob-and-its-activities/report-dnf
Coupland, C. (2005). Corporate social responsibility as argument on the web. Journal of business ethics, 62, 355-366. https://doi.org/10.1007/s10551-005-1953-y
Crossley, R. M., Elmagrhi, M. H., & Ntim, C. G. (2021). Sustainability and legitimacy theory: The case of sustainable social and environmental practices of small and medium‐sized enterprises. Business Strategy and the Environment, 30(8), 3740-3762. https://doi.org/10.1002/bse.2837
De Villiers, C., & Van Staden, C. J. (2006). Can less environmental disclosure have a legitimising effect? Evidence from Africa. Accounting, organizations and society, 31(8), 763-781. https://doi.org/10.1016/j.aos.2006.03.001
De Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated Reporting: Insights, gaps and an agenda for future research. Accounting, auditing & accountability journal, 27(7), 1042-1067. https://doi.org/10.1108/AAAJ-06-2014-1736
Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures–a theoretical foundation. Accounting, auditing & accountability journal, 15(3), 282-311. https://doi.org/10.1108/09513570210435852
Degregori, G., Brescia, V., Calandra, D., & Secinaro, S. (2025). Evaluating sustainability reporting in SMEs: insights from an ethical cooperative bank's approach. Journal of Global Responsibility, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JGR-10-2024-0197
Del Baldo, M. (2017). The implementation of integrating reporting in SMEs: Insights from a pioneering experience in Italy. Meditari Accountancy Research, 25(4), 505-532. https://doi.org/10.1108/MEDAR-11-2016-0094
Del Baldo, M. (2018). Integrated reporting in small and medium enterprises: Issues and perspectives from Italy. Current Issues in Corporate Social Responsibility: An International Consideration, 195-215. https://doi.org/10.1007/978-3-319-70449-4_13
Deloitte (2022). Osservatorio nazionale sulle dichiarazioni di carattere non finanziario. https://www.deloitte.com/content/dam/assets-zone2/it/it/docs/services/audit-assurance/2024/osservatorio-dnf-5-edizione-deloitte.pdf
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American sociological review, 48(2), 147-160. https://doi.org/10.1515/9780691229270-005
Di Tullio, P., La Torre, M., & Rea, M. (2025). Sustainability reporting regulation: hypes, myths and reflections. Management Decision. https://doi.org/10.1108/MD-10-2024-2462
Dinh, T., Husmann, A., & Melloni, G. (2023). Corporate sustainability reporting in Europe: A scoping review. Accounting in Europe, 20(1), 91-119. https://doi.org/10.1080/17449480.2022.2149345
Discua Cruz, A. (2020). There is no need to shout to be heard! The paradoxical nature of corporate social responsibility (CSR) reporting in a Latin American family small and medium-sized enterprise (SME). International Small Business Journal, 38(3), 243-267. https://doi.org/10.1177/0266242619884852
Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: Social values and organizational behavior. Pacific sociological review, 18(1), 122-136. https://doi.org/10.2307/1388226
Du Toit, E. (2024). Thirty Years of Sustainability Reporting: Insights, Gaps and an Agenda for Future Research Through a Systematic Literature Review. Sustainability,16, 10750. https://doi.org/10.3390/su162310750
Dumay, J., Bernardi, C., Guthrie, J., & La Torre, M. (2017). Barriers to implementing the International Integrated Reporting Framework: A contemporary academic perspective. Meditari Accountancy Research, 25(4), 461-480. https://doi.org/10.1108/MEDAR-05-2017-0150
Dumay, J., La Torre, M., & Farneti, F. (2019). Developing trust through stewardship: Implications for intellectual capital, integrated reporting, and the EU Directive 2014/95/EU. Journal of Intellectual Capital, 20(1), 11-39. https://doi.org/10.1108/JIC-06-2018-0097
EFAA (European Federation of Accountants and Auditors) for SMEs. (2023). Sustainability Reporting Assurance How SMPs Can Build the Capacity to Support SMEs. Retrieved from: https://efaa.com/wp-content/uploads/2023/04/Guide-final-Sustainability-Reporting-Assurance.pdf.
EFRAG (2024a). EFRAG IG 1 Materiality Assessment. Implementation guidance. Retrieved from: https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/IG%201%20Materiality%20Assessment_final.pdf
EFRAG (2024b). Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME). Retrieved from: https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/VSME%20Standard.pdf
Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge. https://doi.org/10.4324/9781351280129
Euronext (2025). ESG Reporting Guide and ESG Trends Report 2025. https://connect.euronext.com/en/node/2314347?utm_source=chatgpt.com
European Commission (2025). Raccomandazione su reporting volontario per PMI (VSME).
Fatma, M., Rahman, Z., & Khan, I. (2014). Multi-item stakeholder based scale to measure CSR in the banking industry. International Strategic Management Review, 2(1), 9-20. https://doi.org/10.1016/j.ism.2014.06.001
Fauzi, H., Svensson, G., & Rahman, A. A. (2010). “Triple bottom line” as “Sustainable corporate performance”: A proposition for the future. Sustainability, 2(5), 1345-1360. https://doi.org/10.3390/su2051345
Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge university press. https://doi.org/10.1017/CBO9781139192675
Gray, R. H., Owen, D. L., & Adams, C. A. (2003). Accounting and accountability: Changes and challenges in corporate social and environmental reporting. https://durham-repository.worktribe.com/output/1123410
Guidry, R. P., & Patten, D. M. (2010). Market reactions to the first‐time issuance of corporate sustainability reports: Evidence that quality matters. Sustainability accounting, management and policy Journal, 1(1), 33-50. https://doi.org/10.1108/20408021011059214
Guthrie, J., & Parker, L. D. (1990). Corporate social disclosure practice: a comparative international analysis. Advances in public interest accounting, 3, 159-175.
Guthrie, J. (2005). Using content analysis as a research method to inquire into social and environmental disclosure: what is new?. In Australasian Centre for Social and Environmental Accounting Research Conference (pp. 1-12). CSEAR. https://doi.org/10.1108/14691930410533704
Guthrie, J., & Farneti, F. (2008). GRI sustainability reporting by Australian public sector organizations. Public Money and management, 28(6), 361-366. https://doi.org/10.1111/j.1467-9302.2008.00670.x
Hahn, R., & Kühnen, M. (2013). Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research. Journal of cleaner production, 59, 5-21. https://doi.org/10.1016/j.jclepro.2013.07.005
Hickman, L. E. (2020). Information asymmetry in CSR reporting: publicly-traded versus privately-held firms. Sustainability Accounting, Management and Policy Journal, 11(1), 207-232. https://doi.org/10.1108/SAMPJ-12-2018-0333
Holcomb, J. L., Upchurch, R. S., & Okumus, F. (2007). Corporate social responsibility: what are top hotel companies reporting?. International journal of contemporary hospitality management, 19(6), 461-475. https://doi.org/10.1108/09596110710775129
Khoja, F., Adams, J., Kauffman, R., & Yegiyan, M. (2022, April). How SMEs benefit from environmental sustainability strategies and practices. Supply Chain Forum: An International Journal, 23/2, 97-112. Taylor & Francis. https://doi.org/10.1080/16258312.2022.2036580
KPMG (2022). Big shifts, small steps Survey of Sustainability Reporting 2022. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2022/10/ssr-small-steps-big-shifts.pdf
Krippendorff, K. (2018). Content analysis: An introduction to its methodology. Sage publications. https://doi.org/10.4135/9781071878781
Kuppig, V. D., Cook, Y. C., Carter, D. A., Larson, N. J., Williams, R. E., & Dvorak, B. I. (2016). Implementation of sustainability improvements at the facility level: Motivations and barriers. Journal of Cleaner Production, 139, 1529-1538. https://doi.org/10.1016/j.jclepro.2016.08.167
Lawrence Neuman, W. (2014). Social research methods: Qualitative and quantitative approaches. Retrieved from: http://194.164.49.16:8080/jspui/bitstream/123456789/156/1/Social%20Research%20Methods%20%28Eng%29%205MB%282%29.pdf
McNally, M. A., Cerbone, D., & Maroun, W. (2017). Exploring the challenges of preparing an integrated report. Meditari Accountancy Research, 25(4), 481-504. https://doi.org/10.1108/MEDAR-10-2016-0085
Massa, L., Farneti, F., & Scappini, B. (2015). Developing a sustainability report in a small to medium enterprise: process and consequences. Meditari Accountancy Research, 23(1), 62-91. https://doi.org/10.1108/MEDAR-02-2014-0030
Milne, M. J., & Adler, R. W. (1999). Exploring the reliability of social and environmental disclosures content analysis. Accounting, auditing & accountability journal, 12(2), 237-256. https://doi.org/10.1108/09513579910270138
Morsing, M., & Spence, L. J. (2019). Corporate social responsibility (CSR) communication and small and medium sized enterprises: The governmentality dilemma of explicit and implicit CSR communication. Human relations, 72(12), 1920-1947. https://doi.org/10.1177/0018726718804306
Muslichah, M. U. S. L. I. C. H. A. H., Wiyarni, W. I. Y. A. R. N. I., & Nursasi, E. N. G. G. A. R. (2020). Model of the integrated reporting for SMEs. Journal of Sustainability Science and Management, 15(2), 146-161. Retrieved from: https://jssm.umt.edu.my/wp-content/uploads/sites/51/2018/05/12_15.2.pdf
O’donovan, G. (2002). Environmental disclosures in the annual report: Extending the applicability and predictive power of legitimacy theory. Accounting, Auditing & Accountability Journal, 15(3), 344-371. https://doi.org/10.1108/09513570210435870
OECD (OECD (Organisation for Economic Co-operation and Development). (2025). Fostering convergence in SME sustainability reporting. Retrieved from: https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/02/fostering-convergence-in-sme-sustainability-reporting_133eb77f/ffbf16fb-en.pdf
OECD (OECD (Organisation for Economic Co-operation and Development). (2006). 2006 Annual report on sustainable development work in the OECD. Retrieved from: https://www.oecd.org/greengrowth/38392143.pdf, latest access 19 May 2023
OIBR (Organismo Italiano Business Reporting). (2022). Operationalising materiality. Retrieved from: https://www.fondazioneoibr.it/en/guidelines-and-documents/.
Ortiz-Martínez, E., Marín-Hernández, S., & Santos-Jaén, J. M. (2023). Sustainability, corporate social responsibility, non-financial reporting and company performance: Relationships and mediating effects in Spanish small and medium sized enterprises. Sustainable Production and Consumption, 35, 349-364. https://doi.org/10.1016/j.spc.2022.11.015
Ortiz-Martínez, E., & Marín-Hernández, S. (2024). Sustainability information in European small-and medium-sized enterprises. Journal of the Knowledge Economy, 15(2), 7497-7522. https://doi.org/10.1007/s13132-023-01386-7
Pan, X., Chen, X., & Sinha, P. (2023). Navigating the haze: Environmental performance feedback and CSR report readability. Journal of Business Research, 166, 114116. https://doi.org/10.1016/j.jbusres.2023.114116
Patel, P. C., Pearce II, J. A., & Oghazi, P. (2021). Not so myopic: Investors lowering short-term growth expectations under high industry ESG-sales-related dynamism and predictability. Journal of Business Research, 128, 551-563. https://doi.org/10.1016/j.jbusres.2020.11.013
Patten, D. M. (1992). Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory. Accounting, organizations and Society, 17(5), 471-475. https://doi.org/10.1016/0361-3682(92)90042-Q
Pinney, C., Lawrence, S., & Lau, S. (2019). Sustainability and capital markets—Are we there yet?. Journal of Applied Corporate Finance, 31(2), 86-91. https://doi.org/10.1111/jacf.12350
Pizzi, S., & Coronella, L. (2024). Are listed SMEs ready for the corporate sustainability reporting directive? Evidence from Italy. Business Ethics, the Environment & Responsibility
Prasanna, R. P. I. R., Jayasundara, J. M. S. B., Naradda Gamage, S. K., Ekanayake, E. M. S., Rajapakshe, P. S. K., & Abeyrathne, G. A. K. N. J. (2019). Sustainability of SMEs in the competition: A systemic review on technological challenges and SME performance. Journal of Open Innovation: Technology, Market, and Complexity, 5(4), 100. https://doi.org/10.3390/joitmc5040100
Roberto, F., Principale, S., Carello, L. A., & Conte, P. (2024). Exploring sustainability reporting in Italian listed SMEs. Piccola Impresa/Small Business, (1). https://doi.org/10.14596/pisb.4016
Roca, L. C., & Searcy, C. (2012). An analysis of indicators disclosed in corporate sustainability reports. Journal of cleaner production, 20(1), 103-118. https://doi.org/10.1016/j.jclepro.2011.08.002
Setyaningsih, S., Widjojo, R. & Kelle, P. (2024). Challenges and opportunities in sustainability reporting: a focus on small and medium enterprises (SMEs), Cogent Business & Management, 11(1), 2298215. https://doi.org/10.1080/23311975.2023.2298215
Sciulli, N., & Adhariani, D. (2021). An exploration of the motivating factors for the preparation of an integrated report in contextual settings. Qualitative Research in Accounting & Management, 18(4/5), 545-577. https://doi.org/10.1108/QRAM-08-2020-0128
Schiehll, E., & Kolahgar, S. (2021). Financial materiality in the informativeness of sustainability reporting. Business Strategy and the Environment, 30(2), 840-855. https://doi.org/10.1002/bse.2657
Schultz, F., Castelló, I., & Morsing, M. (2013). The construction of corporate social responsibility in network societies: A communication view. Journal of business ethics, 115, 681-692. https://doi.org/10.1007/s10551-013-1826-8
Somoza, A. (2023). Voluntary sustainability assurance in small and medium-sized entities: The role of country origin in Europe. Business Strategy and the Environment, 32(1), 462–483. https://doi.org/10.1002/bse.3155
Sridhar, K. (2012). Corporate conceptions of triple bottom line reporting: An empirical analysis into the signs and symbols driving this fashionable framework. Social Responsibility Journal, 8(3), 312-326. https://doi.org/10.1108/17471111211247901
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of management review, 20(3), 571-610. https://doi.org/10.5465/amr.1995.9508080331
Tewari, R., & Dave, D. (2012). Corporate social responsibility: Communication through sustainability reports by Indian and multinational companies. Global Business Review, 13(3), 393-405. https://doi.org/10.1177/097215091201300303
Threlfall, R., King, A., Shulman, J., & Bartels, W. (2020). The time has come: The KPMG survey of sustainability reporting 2020. KMPG IMPACT: Singapore, 63. Retrieved from: https://assets.kpmg.com/content/dam/kpmg/be/pdf/2020/12/The_Time_Has_Come_KPMG_Survey_of_Sustainability_Reporting_2020.pdf
Trianni, A., Cagno, E., & Neri, A. (2017). Modelling barriers to the adoption of industrial sustainability measures. Journal of Cleaner Production, 168, 1482-1504. https://doi.org/10.1016/j.jclepro.2017.07.244
Zamil, I. A., Ramakrishnan, S., Jamal, N. M., Hatif, M. A., & Khatib, S. F. (2023). Drivers of corporate voluntary disclosure: a systematic review. Journal of Financial Reporting and Accounting, 21(2), 232-267. https://doi.org/10.1108/JFRA-04-2021-0110
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright (c) 2026 Monica Bartolini, Giorgia Moschini